Tuesday, March 17, 2009

WaPo Still Hoping to Mess With Social Security

Fred Hiatt is the editorial page editor of the Washington Post. In the March 16 issue he actually has a signed column praising the Obama approach to transportation policy. In the midst of this he also writes, "maybe we can hope for reform of social security and health care too." While we need reform of health care, we do not need it for social security, and the WaPo editorial page, and just about all its regular columnists, have been among the most consistent trumpeters of the "social security is in crisis!" baloney that just persists and persists in Washington, with them also pushing the theme of "entitlements crisis," viewing social security as in the same league as health care.

Fortunately, after worries that Obama was buying into this baloney with his "Entitlements Summit," it increasingly appears that he is reverting to his campaign position of not wanting to do anything to social security, or at least not wanting to do anything to the benefits side, with the key player on this being probably Peter Orszag, OMB Chief, who has made it clear that the real problem is indeed health care. As for social security, what I have said umpteen gazillion times still holds: it ain't broke and it don't need no fixin'.

It's good to see Barkley carrying the word to Econospeak. This is a theme that can't be repeated too often or in too many varied places.The wider the spread, the more frequent the repetition, the more likely to grab hold as the facts that it bears. You may be interested to know that Dean Baker mabages to work the idea into a post on Counterpunch. The most salient, to the Social Security is not in crisis issue, statement is worth repeating. "The sums of money going to bail out the financial industry dwarfs the waste and pork that get John McCain and other budget hawks excited, yet they are strangely calm about the bailout money. In fact, the amount we spent patching the financial system could well be large enough to make the Social Security system fully solvent over its 75-year planning horizon, yet we barely hear a peep from the Peter G. Peterson Foundation and its merry band of anti-Social Security crusaders." The full post has more to do with the bail out of the investment banks, but Dean manages to take a shot at the Peterson Foundation within that context. Truly commendable. Full post is here: http://www.counterpunch.com/baker03172009.html

Thanks for the update; however, I wouldn't relax one bit or at least not yet. I thought the Obama administration rolled way to easily enlight of the AIG bonuses. The administration could still switch directions on SS if pushed.

Not sure I get your drift. You mean by "rolled" is going along with the push to clawback one way or another those bonuses, despite their being contractual (something Summers pointed out on TV over the weekend)? That is clearly a matter of responding to a firestorm of public anger that threatens his entire presidency. I have to think back some time to remember quite such a firestorm of nearly universal anger.

I do not foresee any such firestorm erupting to demand benefit cuts in social security. If anything I would expect the opposite, a firestorm if there were really a serious proposal to cut the benefits, especially if it applied to current recipients or people soon to retire.

Regarding those contracts, I do note whatever one thinks about them or their "sanctity," they were signed under the Bush administration, not the Obama one, and even apparently predate the TARP, if not the original AIG bailout, with reportedly Geithner being at least somewhat aware of them back then as NY Fed prez.

"...despite their being contractual (something Summers pointed out on TV over the weekend)?"

And this is a point that is getting entirely too much airing along with insufficient understanding of the laws of contracts. There is an interesting and informative op-ed piece in today's NY Times in this regard from a Professor at GWU law school, Lawrence Cunningham.http://www.nytimes.com/2009/03/18/opinion/18cunningham.html?ref=opinion

There were two parties to those contracts and I would guess that the employees weren't contracted to simply breath and lose money while in AIG's employment. Contracts require performance on the part of both parties. Good old Larry Summers might have some difficulty with the concept of performance prior to reward. Try to not lose sight of the fact that those are the employees that virtually flushed AIG down the toilet of insolvency. Absent the billions of dollars flushed in by the Treasury Dept AIG was insolvent. That doesn't make for a very strong case in favor of employee reward, or retention for that matter.

I have not gotten my pitchfork out yet on this AIG bonus thing because a) I have not seen what is in the contracts, and b) I do not know that the recipients were the people who brought AIG (and so much else) down, rather than people who were supposed to help fix up the mess and actually did so.

It certainly feels good to feel all outraged at what has gone on at AIG, but joining a lynch mob to go after a particular set of people kind of puts me off, especially when it might turn out to be the wrong set of people.

"...rather than people who were supposed to help fix up the mess and actually did so."

Well I've not yet taken out the pitch fork, but I am greasing the flank rails on the guillotine. I like to be ready. None of the information to date indicates that the AIG employees in question were new hires. All available information suggests that they were there and busy with the business of selling CDS instruments. Some have even claimed that that is the primary reason for retaining those employees and payinig the bonuses. The argument is along the lines of, "They're the experts who know all about these arcane instruments. They're expertise is needed to untangle this vast web of co-party interests." So much for a rational argument. If the web was so intricate how did the first billions flow so quickly o ut the doors to the big investors now identified? Would not any good bankruptcy auditor not be able to unwind the so-called tangled web? The very idea of such intricacy reminds me of the phrase concerning one's intention to deceive via the tangled webs they do weave.